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Is your trade secret online? Then I’ve got some bad news for you.

June 18, 2011

I frequently get calls from clients — usually those frustrated by California’s reluctance to enforce non-competes and non-solicitation agreements — about departing employees trying to steal the client’s customers for the employee’s new company.  “How can they take my customer contact list and use it?  That’s my trade secret!”

But is it?  It depends on the context, of course, but generally information that is already out there, i.e., is available from publicly available sources, is not a trade secret.  Not so long ago, the argument used to be that customer data that could be found in a phone book was not a trade secret, but other contact information was.  So the name of the company you do so much work for and the company’s main switchboard number would not be a trade secret, but the name and direct dial number of the purchasing department head would be.

But social media has undermined that argument significantly.  I ran across this informative post on Delaware Employment Law Blog recently (thanks, @MollyDiBi), discussing cases in which LinkedIn has had a substantive impact.  LinkedIn, and other online data sources like Bloomberg and Facebook, lets anyone with a keyboard conduct very robust searches into who has what particular function at a particular company, and how to get in touch with them.  And as the publicly-available data gets more detailed, it’s harder for a former employer to keep even its most detailed contact list locked in the trade secret vault.

So what can employers do to protect against poaching alumni?  Keep your secrets secret — don’t give out sensitive data like sales histories and business strategies to those who don’t need them.  Have employees sign confidentiality agreements promising to keep secret stuff to themselves and not to take it, or use it, after they leave.  Keep track technologically of what your employees are looking at or sending out, and impose discipline if classified material is being accessed inappropriately.  Last but not least, don’t be overly broad in any necessary enforcement efforts — focus on what’s important, and legitimately secret, and leave the public stuff out of any suit or cease-and-desist letter.

Keep your real secrets in the vault where they belong, and you’ll stand a much better chance of keeping them safe from prying eyes within and without.

  1. Cool insights, I am guessing not too many companies are using vaults to save trade secrets. It’s quicker to save a file on your computer in a pw protected folder (one would think). I agree with you 100% that tight technical monitoring is smart accompanied by a strong acceptable use policy.

  2. Michael,

    Thanks for the comment. I think you’re right, and meant “vault” a bit loosely to imply steps to keep things under wraps from the general public. But what I think and what I write are sometimes the same thing. 🙂

    Thanks for posting and for your interest.


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  1. Employee non-competes — it’s different in California « California workplace law blog

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